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International leasing lawyers

International finance leasing

Financial leasing is an economic operation that has recently experienced quick development in most countries in the world, especially developing countries and those experiencing economic transition. In the past decades the globalization of trade has led to the increasing of commercial and financial transaction between countries. This situation has created a need for new forms of contracting which is why financial leasing was created and incorporated in some way into the legislation of most countries.

leasing lawyer UNIDROIT In Russia financial lease agreements also called leasing are governed by articles 665 through 670 of the Civil Code, as well as by the provisions of the Federal Law N164-FZ about finance leasing adopted in 1998. A leasing agreement is set between three parties - a supplier, a lessor and a lessee, and it includes two contracts; the supply contract between the supplier and the lessor and the leasing contract between the lessor and the lessee. A leasing agreement obliges the lessor to purchase an asset (often technical equipment) from a supplier both the asset and supplier being chosen by the lessee or lessor according to signed contract; the lessor will then provide the lessee with temporary possession and use of the asset in exchange for a fee, all of that for a fixed period of time. At the end of the fixed term, the lessee has the option to acquire ownership of the asset usually by paying a fee or by obtaining a reduced purchase price to the lessor. Any non-consumable asset whose free circulation is not prohibited by law can be the subject to a leasing agreement. Those rules apply to both national lease agreements (in which both the lessor and the lessee have Russian citizenship) and international lease agreements (in which only one of the parties has Russian citizenship).

international leasing lawyer In addition to national legislation regarding leasing, financial leasing agreements in which one of the parties has Russian citizenship (or Russian residence for legal entities) are also, under certain conditions, regulated by international treaties and agreements on leasing that the Russian Federation is part of.

The only international agreement on financial leasing currently in force is the UNIDROIT convention on International Financial Leasing which was created in 1988 with the objective to create a body of uniform rules in the field of financial leasing in order to achieve certainty in international trade. Aside from this convention UNIDROIT has provided its members with a model law on leasing that the members are free to incorporate or not into their national legislation.

As a member of UNIDROIT the Russian Federation has to abide by the rules of the UNIDROIT Convention on International Financial Leasing. This chapter is structured in three chapters; the first one delimits the sphere of application of the convention and sets general provisions, the second one lists the rights and obligations of the parties and the last one includes final provisions.

According to the provisions of the first chapter this convention applies to all financial leasing contracts that have business or professional purposes, including sub-leasing contracts, concluded between a lessor and a lessee whose place of business are set in two different countries, provided that both of those countries as well as the one in which the supplier’s business is set are members of the convention, and that both the supply agreement and the leasing agreement are governed by the law of a country that is part of the convention. It should be noted that this convention grants contracting parties the freedom to exclude the application of its provisions or to derogate to it, as long as all three parties agree to it.

russian finance leasing lawyer In its second chapter, this convention lists the rights and duties of the parties. Article 7 guarantees the validity of the lessor’s real rights over the leased asset against the lessee’s creditors and trustee in bankruptcy (including those who have an execution or an attachment), as long as public notice rules have been complied with when they are required by law. The applicable law in regards to this is that of the country in which the asset is located, except in the case of a ship or an aircraft for which the applicable law is that of the country in which the asset is registered. This article doesn’t affect the priority of creditors who have a consensual or non-consensual lien or security interest in the asset other that an execution or attachment or, in the case of aircraft and ships, who have a special right of arrest, detention or disposition. Article 8 excludes the liability of the lessor in its capacity of lessor in cases of damages caused by the asset to a third party, except in cases in which the lessee has suffered loss as a result of their reliance on the lessor’s skills and judgment and on their – the lessor’s- intervention while choosing the supplier or the asset. Article 9 compels the lessee to take proper car of the asset and use it reasonably and to return it in good conditions if they chose not to buy it or to elongate the lease at the end of the contract. Article 10 states that the supplier’s duties under the supply agreement are owed to both the lessor and the lessee, although the supplied won’t be liable to both of them in respect of the same damage. The following article states that the rights subsequently earned by the lessee under the supply agreement cannot be affected by any term of the supply agreement unless the lessee has consented to it. Article 12 governs matters of delivery or conformity failures of the asset in regards to the supply agreement. It grants the lessee the right to reject the asset and withhold payment until the lessor has remedied, or to terminate the leasing agreement and recover a sum, and the right for the lessor to remedy its failure. Article 13 governs matters of default by the lessee. It grants the lessor the right to obtain accrued unpaid rentals as well as damages and interests, and, in cases where the lessee’s fault is substantial, the right to obtain the acceleration of future payments after notifying the lessee and giving them time to remedy, or to terminate the leasing agreements and recover the asset as well as damages. Article 14 allows the lessor to transfer their rights created by the leasing agreement while said leasing agreement is still effective, although it won’t relieve them of their duties as a lessor. The lessee, however, can only transfer their rights created by the leasing agreement with the consent of the lessor.

russian leasing lawyer The third and final chapter of the convention sets the conditions of accession to the convention by the countries and the conditions of application in each country.

Because UNIDROIT’s objective is to harmonize international private law by providing its members with model laws and uniform rules, it doesn’t have any enforcement mechanism, which means that matters governed by this convention are to be settled by the country whose law is applicable by virtue of international private law. No sanctions are planned in the case a country fails to apply the provisions of the convention.

If it is required to suit a trial in Russia according to contract and according to wrote above our law firm is ready to provide the best legal service. Our leasing lawyers have huge experience and legal knowledge to reach the main client’s goal. Our lawyers are able to provide such services in case of international contract disputes outside Russia.

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